Krugman's Old Saw Gets Hammered

I've got to slog through the report to see if the methodology is sound, but the conclusions of a new Fed report seem entirely logical and refute one of Paul Krugman's famous threads on which he hangs the assertion that the current economy is a disaster, namely that unemployment is understated because so many people are discouraged at the lack of opportunities and thus are not counted as unemployed. With this already dubious argument now gone, I guess he can still hang economic catastrophe on the fact that the government doesn't offer unlimited, fully-paid hip replacements.

UPDATE: For those who don't subscribe to the WSJ, the article mentions a new report out by Fed economists Stephanie Aaronson, Bruce Fallick, Andrew Figura, Jonathan Pingle and William Wascher that says that the low unemployment rate of the last few years is indeed reflective of the strong job market, and specifically that it is not artificially low because discouraged workers have left the work force and go uncounted. This assertion, that there are numerous discouraged workers leaving the workforce and artificially reducing the unemployment rate, has been a staple argument for the likes of Krugman.

Incidentally, the original study is here.